I remember when I was learning Italian that my mega-Garzanti dictionary had 3 words for a lousy politician or politicaster (which clearly derives from "politicastro". Clearly, interfering politicians have a long and dishonourable history dating back centuries - what's new? What a pity that such a venerable institution should be plagued by this carcinogen.

It is amazing how the media in Italy are downplaying the Monte dei Paschi scandal and avoiding every contact with the PD (the Democratc Party heir of the Italian Communist Party), and former communist Bersani the true responsable of the criminal management of this bank since he has put his men in key position from the presidence to che board of directors. This party is acting like a true mafia, like a true criminal organization. Italians are unaware of the danger they are running if this party with such criminal traits, should manage the country. The style would be more or less the same they used in managing the bank. The leopard doesn't change his spots.

According to the last news Obama is on the point to file charges also against MOODY'S too as I have above forekast. In some sense these rating Services sound fishy to Obama and to us too and their members cannot be much trustworthy. Monti who is, who was Moody's senior member and at the same time he was, he is Goldman Sachs's advisor (the merchant bank sister of the Lehman's) he is to be avoided like the plague. If this political joke gets elected to office (Italy's PM),then it's no joke.

Reading this article it becomes quite clear that "D.L. in Rome" must be Italian, as the article does not even attempt to scratch the surface of the real problems of the Italian banking system:
- the deep entanglement between politics and financial sector, which makes every transparent analysis impossible and thus every solution just a window dressing
- tha fact that - although an EU member - Italy is one of the few countries which keeps to its own accounting rules, not complying to the Basel agreements. This makes controle and insight in the real financial position of banks impossible and facilitates the same smoking screens to which the world is used regarding Italian finance at all levels.
- the deep incompetence of Draghi who should be kicked out of office immedialtely and promoted as cashier at the ticket-selling booth of the railwaystation of Novara.

My friend Millovan, do not bother to erase my comments, this will not bring money in MPS's pockets.

While in Italy the mass media and the left Press are diverting people'attention with laughable issues and gossips like e.g.Berlusconi's comments on Mussolini's deeds, something banal and insignificant that happened 80 years ago and nobody cares, they don't make much of the huge, appaling scandal concerning the PD the criminal left party heir of Communism, which through the bank Monte dei Paschi of Siena has stolen and snatched 14 billion euros and is on the point of ruling Italy. A terrifying event for Italy and Europe.

Italian media never goes into the depth of things, regardless left and right. Probably people just do not care to know the truth as they do not care about responsabilities. See mr. What's His Name Costa Concordia Captain who does not agree with his lay off...
I am sure that mr. Schettino will keep his job, MPS will get state aid and nobody will loose their job, let alone admit responsability.
It is not the first and certainly not the last financial fraud in Italy. Draghi will print some monies and fix the thing.

You are free to defend whatever and whomever you want. Petty nationalism and lack of information are a main characteristic of the Italians I know.
I would be personally ashamed to scream what a wonderful country I am living in, while the whole world knows this is not the case.
I would also be ashamed to throw mud to others while aware (?) of the problems at home.
The whole Italian banking system is rotten because - as everything in Italy - is old fashioned, geared to maintain the status quo, lacks responsability (PERSONAL responsability) and it is deeply corrupt.
Keep om paying for this status quo and keep on announcing that MPS and Parmalat and Antonveneta, etc, etc are incidents in a marvelous, world leading country. Happy I do not live in it and still hoping that the union will change members.
My gift for you today: take a look at the SNS story in Holland and seek the 100 differences!

Although I happen to be an Italian (with a very small amount of Swiss blood), I fully understand and mostly sympathise with your point of view. As a people, Italians do have many problems, some very ancient and some less so. In particular, among Italian middle classes the lack of responsibility you justly lament (with attendant open and universal cheating and rent seeking) is a mostly recent phenomenon, which in my own life I have seen growing under my very eyes. As a culture, it has swept the country during the last 40 years or so, mostly under the umbrella of various sorts of haughty but empty preaching about solidarity and social justice. And, as you rightly imply, the consequences of that self-indulgent delusion are coming home to roost right now, with among other things increasing difficulties in keeping in step with our Northern European partners.
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Yet, all that granted, you must also accept that deep down in Italy's cultural DNA there are other things as well. Think in particular of the two generations of my grandfathers and fathers, who through sheer self discipline and foresight rescued Italy from the twin disasters of Fascism and defeat and made of it a fully industrialised, free and modern country by 1960.
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True, much of Italy remained underdeveloped through all that — as testified by the swift passage of so many Italians, in 1943-45, all the way from a fully Fascist to an equally uncritical Stalinist-Communist allegiance. Italy was indeed the only country in the world to risk to become a Soviet satellite by popular vote, and it can be argued that many of our current problems — including Mr Berlusconi — are but a late afterglow of just that.
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Still, things are moving. However deluded and sometimes corrupt, to-day's Italian left is a very far cry from its old Komintern self. Moreover, Italian pathetic provincialism is been daily eroded by our international linkages: you must not think that our rather emotional friend Mr Solari — who calls himself MilovanDjilas here — is entirely representative under that respect, and even he can be patiently brought to see the light, from time to time. More still, think of Mr Monti, whose "technocratic" government was accepted (albeit grudgingly) by both main sides of Parliament, in the teeth of an impending debt crisis in November 2011, and who is now offering a new European choice to Italy's voters. Nothing of that sort could have been even imagined as recently as 2010, and it shows very clearly how far things can change over here with a little help (meaning mainly a push) from our Northern friends. So please keep up the good work, hammering away on good old "Milovan", and don’t ever give up your hope.

Thank you for your interesting and intelligent comment.
My impression (obviously subjective) - after extensive experience of living and working in Italy, is the other way around: mr. "Milovan" is the norm, you may be the exception.
I see very few things changing in Italy, for better of for worse. I do not see Monti as a change. He is a little improvement, but as many other things I dealt with in Italy..too little too late. I think in the most Western countries it is impossible for a politician to say publicly, repeatedly that he would not run a second time and do just the opposite within months. The Italian politics looks like child play on the schoolyard (the Monti government included) when mature politicians turn their back and run away if they are not able to find compromise for their policies. "If you don't agree with me, I pick up my toys and go home".
I am not necessaily referring to the Dutch politics here, but I am wondering how many times should Obama have left office just because the Congress wouldn't give him his way? Or Merkel?
On the other side I wouldn'say say we are an example (I mean the Dutch). We are highly hypocritical in international politics ("we did support the invasion of Irak theoretically, but not materially", we agree that Palestinians are treated unjustly but we advise them not to request a seat in the UN, "because it is in their best interest to wait").
Internally, we treat Dutch of foreign origin in a discriminatory way but point fingers at other nations and lecture them on how to deal with diversity. We silently wire loads of money to European countries which are in financial problems due to their own responsibility and at the same time we cut help to former colonies and third world countries which made us rich and to whom we do have responsibility.
So we are far from being an example. One thing is different though: we do work hard (although the Germans are more productive than we are) and we do start the criticizing with ourselves...

...apologize for the second reply, maybe the most relevant for Italy and where might its change come from:
1. Few years ago, in a hotel in Florence, the shower broke. Asked the reception if they could fix it. Answer: "Me? Fix your shower? Just who do you think you are? If you want luxury, go to a five starts hotel. This is a three starts hotel". (Room rate: Eur 125 a day). "Stupid foreigners. There is only one Florence in the world you know, people come here to see art, you barbarian".
Forgot to mention: the way in which I asked to fix the shower was the usual "Italian beggar way" people use among each other...:'could you please, be so kind, if it does not bother you and if you might find a moment..."etc, etc.
2. Two years ago, the shower broke in my hotel room on Lipari - Sicily. I thought it made no sense to complain about it, I would leave the following day anyway. When coming back after a walk, the receptionist stopped me: "sorry, do you have a moment? Your shower was broken...I called the plumber but I don't know when he is going to come...so I fixed it with ducktape...I apologise for this. But you can use it, it works...". Three stars hotel. Roomrate: Eur 65 a night.

Thank you for your kind reply. I've just two things to add.
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1. Talking of you Dutch silently wiring loads of money to places like this (which is probably true), only keep in mind that by now Italy's Treasury is by far too big a debtor to be bailed out. Which means that any significant default by it would plunge the whole of Europe (and possibly the world) into financial meltdown number two, certainly involving you as well. Yet the cure, in my view, is nothing like Eurobonds, that would just procrastinate the rot. It's redressing Italy's structural failures (mainly potential-GDP stagnation and economically too big a state). So high up on your to-do list, in your own interest, there should be pressing Italians on just that. Which brings me to:
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2. Mr Monti. Whatever you might feel about him (he has never run before at any elections and technically he's not personally running even now) he's currently the only hope even for you. He cannot possibly win the elections, but with a good showing of his lists he could influence decisively Italy's reforms during the next five years, which is the right horizon for the things that matter. So just keep your fingers crossed. Indeed, don't ever give up your hope, once again.

In Dutch we have a saying: "soft doctors make smelly wounds" meaning that one needs to reach the point to understand that being too long too soft generates bigger problems than taking hard measures. (This applies to economy).
1.Italy's sovereign debt is unsustainable indeed, but this is Italy's problem and it should stay where it belongs. Cases like Argentina and the former Soviet Union taught us that the lights do not turn off if a country goes bust, no matter how large the economy. Of course everybody looses, but it is obvious to me that we loose more by going on on the same path. Iceland and Argentina suffered two years after which their economies took off. Italy has the same economic problems for the past 30 years and nothing changes.
"Too big to fail" isn't appliccable to everything. I see the addiction to debt of the Southern European countries as a drug addition. You do not get rid of it by softly diminishing dose in a 30 years horizon, you go into rehab.
2.I have no political allegiance in Italy. I did try to understand Italian politics when I was living in Italy, but gave up. Whenever asking an economical question, I got answers which first made me doubt my command of the language, then made me think all people thought I was mentally defficient. But following the Italian campaigns I understood the whole politcal culture is so different that some things will just never change. (Saw Bersani on Dutch tv for half an hour and I could not summarize what he said because he just said ...nothing. Even the question wheather he is afraid of berlusconi's come back was not answered with yes or no, but with a brief history of the Roman Empire, Ovid and...such.)
I can just wish Italy the best, although I wouldn't know what this exactly is in this case. Can't you choose Merkel? Or Hillary Clinton? Or Marchione as a PM?

In comparing Italy with Russia, Argentina and even Iceland you are blissfully jumping over an order of magnitude or two. In Italy's case, your hope that the external effects of default would be easily manageable looks just like wishful thinking. That's exactly why both Mr Bersani and Mr Berlusconi think they can blackmail Mrs Merkel and you into coughing up the short-run money they need to survive a bit more with their irresponsible policies. Yet you are obviously right in arguing that no one should yield to that. Your Dutch proverb has indeed a close parallel in Italian ("il medico pietoso fa ingagrenir la piaga"). The clear alternative answer is structural reforms. After last year's painful fiscal consolidation, a five-year horizon should be (just) enough for that. That's why your cavalier attitude towards Mr Monti's role looks suicidal to me.
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As to the jacobine "mysteries" of Italian politics, that's just a matter of history. Over the last two centuries Italy has mainly been a French cultural colony. So I suggest that, to understand things, you start from French political history, from the Revolutionary Terror that followed 1789 onwards. You, like most of the rest of non-German Northern Europe, have been very lucky to keep outside that dreadful pre-industrial tradition (a mixture of arrogantly irrational ideology and clever cheating, with some occasional plain violence thrown into as well). But, then again, Mr Monti's role must include rescuing Italy from precisely that. Or so one should hope, at least, after Mr Berlusconi's plain failure in the same task.

There is no doubt in my mind that lots of financial institutions, government bodies and companies all over Europe would have to write-off a lot if Italy goes bankcrupt. But I am also very aware that the diminishing of exposure on Italy began long time ago for many parties. This is one of reasons the BTP went skyhigh when left over to the market. Currently is being artificially kept alive by the ECB. But the fact of the matter stays that everyone sells the thing and nobody wants to buy it...
Luckily, bankers are bankers. They can do the math. The Dutch Cenntral bank publishes regularly reports on exposure of all financial institutions per country. The amount of liquidity to Italy is being shrunk for the past three years by 20 to 30% a year.
As to private companies, these are decreasing their activities year after year. (is kind of what I do for a living so believe me, I know what I'm talking about).
Italian level of debt and politics are just one of the aspects which drive these changes. No sign of improvement during Monti months either.
Unlike Italian voters (sorry for being so straight) Dutch pension funds, banks and large companies need to know that - if they start working in Italy next month- they can use the same accounting rules as in the rest of the world (IFRS). This will not change as no politician ever talked about this problem. If they start, they need to know that they can fire personnel which does not perform within a two month notice, as it happens in most European countries. This also is something no Italian politician talks about. Labour market and labour law make Italy a very uninteresting country to deal with. Discourses like "we need to start discussing about changes in law number 18 and change it by 2025" do not convince companies to start working in Italy and hiring Italians.
The payment terms and times in Italy are comparable to the third world. Again, sorry for being blunt. No country/ company in the EU pays its bills within (medium) 260 - 300 days.
So, as much as titles, doctorates and flashy CV's might mean at home, for the outside world they all mean very little. There are too many concrete, tangible things to be done, starting by tomorrow, not by 2020.
I remeber being in Italy when Marchione said that Fiat's real problem are the Italian factories. And that - if these were to be closed - Fiat would be a very sucessful company. Whole Italy was screaming and demonising him. All the Dutch and British I knew in Milan at the time, mostly bankers and entrepreneurs told me : "Boy, that's the man who should lead Italy"...
All the rest.."peace on earth and prosperity for everyone" is nice, but so little tangible...

I'm really sorry to have to disturb your enviable peace of mind, but let's just have a look at the figures (unless otherwise stated, my source is IMF, World Economic Outlook Database, October 2012).
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At the end of 2012 Italy's debt was 1975.94 bn euro. According to Bank of Italy data about 40% of that was foreign held (down from 60% two years earlier). That means about 790 bn euro, or more than 130% of the whole GDP of the Netherlands. Just for comparison, keep in mind that, when it went bust, Lehman Brothers had just 568 bn euro of gross liabilities, of which only one sixth net (source: dollars from Wikipedia converted into euros at to-day's rate by me). So Italy's gross foreign public liabilities are almost 140% of Lehman's (and the net ones much more than that).
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Need I add more? Should Italy's Treasury go bust now, only the resulting initial impact outside Italy would be at least 40% worse than Lehman's crash. Next, the whole Italian banking system would go under. I have no figures at hand about their aggregate foreign liabilities, but they are substantial. So the total foreign shock originating from Italy would be not very far from 1 trn euros. Add now the chain reaction of foreign banks and other firms and even governments (starting from France) going bust as a direct result of that.
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Do you really think that you yourself could easily survive that, just because you are Dutch? Get real. Of course you shouldn't try to bail out Italy (you can't, anyway). But you just cannot afford to shrug it off either. So Mr Monti's last ditch attempts to reform the place should concern you very much indeed. Have a very good night thinking of that.

I am sorry if I wasn't clear enough about it: There is no doubt in my mind that everybody (the Dutch included) would loose lots of money in case of bankcrupcy of the Italian government. Again, I agree with you 100% in this one.
What I am saying is that we loose money on Italy anyway. And the core question is how to limit the losses.
If I take Greece's example: all creditors of Greece already wrote off 50-70% of their claims. THESE MONEY ARE LOST ALREADY. In the meantine, while writing off old debts, we are pumping new money to finance fairy tales of reform. The (a)mount of money to be lost increases instead of decreasing. We should have left Greece go bust. We have had lost all the monet at once, yes. But at the same time both Greece and its creditors could have started again, with a blank sheet and by now (since its crisis began in 2009) the Greek economy would have been in the lift.
I suggest a weird comparison: imagine that your brother is heavy drug addict. If he does not take drugs, feels really very sick. He can't pay for his drugs anymore. He needs your help. What do you do? You buy each month new drugs (otherwise he really feels sick) or do you invest the money of - say 4 of 5 months drug cost - and send him to rehab? It will cost YOU money anyway. There is no doubt here. The question is: do you "bleed" today and finance his fresh start tomorrow or do you turn a half blind eye and keep on financing his addiction? Do you buy drugs this month and let him promise he will stop by 2020?
As to the comparison between Lehman and Italy, it does not work that simple. Banks and specially investment banks like Lehman had their balance sheet filled with derivatives. It is very difficult to put real nominal value of a derivative, this is why they caused so many problems to the financial world and still do: they completely lack transparency.
The largest part of sovereign bonds are nominal. This means that if a country borrows 15 bn for 3 yrs on the market, it really has a debt of 15 bn plus interest on the market. Defaulting countries are easier to manage then defaulting banks. Of course a part of the Italian and greek debt are in derivatives as well, but since 2009 banks need to valuate these things differently and to reduce exposure as well.
With businesses we do this for hundreads of years: we finance, e help a little when they are in distress and - if they do not deliver - we stop financing and let them go bust. Why? Because we "sell" someone else's money (savings) and we need to take care of this too. Why should countries be different? The financial rational is the same. Unlike businesses, whose management can be held to promisses by banks, sovereign countries can't because you never know what kind of politicians are going to run the finances. So sovereigns are a higher risk than businesses. Why not treat them accordingly?

I'm just about to give up. Nothing that has already happened or will ever happen with Greece has any relevance at all to the Italian case, just because of size. As to the possibly still unknown derivative content of Lehman's former liabilities, a 40%-plus margin should be quite enough to any reasonable person. You are still keeping your eyes tightly shut on the actual scary figures, and I can fully understand why.
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Yet denying facts will not send them away. And the plain fact here is that Italy's current sovereign risk is far too big to be managed by you or anybody else by the ordinary financial means you mention. What you need in this case is political tools, to defuse the insolvency by generating the required real resources essentially through future production. That has two stages. First you proceed to fiscal-flows stabilisation, mainly as a signal of seriousness of intent. Then you use the respite so gained to do the required supply-side changes to affect production. The entire process will naturally take some time, but it is in the essential interest of all concerned that it is not pre-empted through either inaction or some unilateral jerk reaction (like Italy's unilateral default and exit from EZ, as someone is crazily suggesting over here right now).
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As things stand now, phase one has been very painfully completed by Mr Monti's government — though perhaps in a less than optimal way. You are quite wrong to ignore that. Together with Mr Draghi's (overrated) commitment to do "all it takes", it has bought some time (and I know some people over here that has made quite handsome money by foreseeing just that, back in 2011 and before Mr Draghi's pronouncement). But the crunch for the crucial stage two is coming right now, with Italy's elections. It really all depends on that, and the outcome is still on a very tight balance indeed. Not that you can actually do much to influence it. Yet I feel that you should at least realise how things stand.

I am sorry to dissapoint you, but I have the feeling you do not really read my agruments.
The only, single economy in the world which can afford to borrow until it drops, is the US. NOT mainly because of the size, but because the USD is the reserve currency if the world economy. The whole world economy is pegged to the USD, the lira does not exist anymore.
As to the rest , please find bellow my reaction:
"Yet denying the facts ...away". Agree, 100%. The denying is happening inside the Italian economy, not in Europe. Because the rest of the countries ARE AWARE of the danger of the Italian economy, they push for reforms.
"Italy's debt is far to large to be managed"...Again, agree 100%. This is an Italian problem, not a German or Dutch or a world's problem. If Italians are aware of that, the only result should be austerity at home. I think you deeply underestimate how much money Italy is already costing due to the purchases of sovereign bonds. I think you fall in the trap of thinking that all world thinks Italian: as long as you do not name and aknowledge the problem, as long as you diffuse it and hide in smoking screens, you're saved for a while. Each and every economist realises not only the structural banckrupcy of the Italian economy. And the fact that it costs HUGE amounts of money, AS WE SPEAK, no matter how you call it.
I am sorry that you did not respond to my drug addict metaphor, although it might seem silly, it has a point. If your brother is an addict, pay for his rehab, not for his drugs.
In the German and Dutch financial press, there are some dareheads who do the math about how much the Southern crisis cost until now and how much would cost in the case of a default. Nobody denies that it costs.
But this doom day scenario of the world going down if Italy goes down, is just not true. Again, the cost would be huge, agree. BUT THE COST EXISTS ALREADY. AND IT IS HUGE. With no concrete perspective of improving.
Maybe the difference in approach between us is the following: the past years many Dutch iconic companies were left to bankcrupcy. Ever heard of Fokker? Bankcrupt. Philips? Shrunk to a half. ABN? Bankcrupt. ING? On state aid infuse. SNS? Bankcrupt. Nedcar? Bankcrupt. Did this all cost money? Yes. Jobs? Yes. But our way is see the problem and fix it structurally, DO NOT BUY TIME. No soft doctors. And specially no fear for the unknown.
Were the soutions applied to Fiat, Alitalia, etc. the right ones? Don't think so.
I will not respond to your suggestions about improving Italian economy just because I don't want to bother you with too long a post.

...sorry to bother with a second reply, I wanted to share the link bellow. It is in Dutch, but I suppose reading the graphs shouldn't be a problem: the exposure of the Dutch financial institutions (these are mainly banks and pension funds) on various Eyrocountries, with amounts and developments: France decreasing by 16%, Italy by almost 10% per year. Amount of Dutch exposure on Italy (as a whole): 50 billion Euro's. Less that a half on Italian public institutions. Even if we were to loose all these money tomorrow, do you still think the lightd would turn off in Holland? (Obviously, the bankcrupcy of the Italian government, 25 bn in exposure does not mean we wouldn't see a dime back and would also not mean that the whole 50 bn would dissapear...but let's say they would...
Very curious if this gives you a different perspective...

Let me try and pinpoint the real disagreements between us:
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1. "This [Italy's possible default] is an Italian problem, not a German or Dutch or a world's problem." In my view (and I have given you the figures) that's even worse (by 40%) than saying that Lehman's default was only a matter for its shareholders. Quite simply not true, and — with all due respect — sheer crazy folly in terms of likely consequences. As to your latest post, the relevant questions appear to be: what was the *direct* Dutch exposure to Lehman? How did that compare with the overall contagion and macroeconomic impact? How much deeper into the ground can you stick your head?
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2. "BUT THE COST EXISTS ALREADY. AND IT IS HUGE." I don't believe that's true either. As far as Italy is concerned, you are probably meaning past ECB emergency loans to banks. Yet during the past year the banks have started repaying them (so much so that the ECB balance sheet has significantly contracted). And they were peanuts anyway, relative to #1: besides, Europe's taxpayers didn't have to pay even for that, as HICP inflation has actually decelerated since January 2012. Moreover, Italy is still paying into EC more than it's getting out of it. So, for the time being at least, you seem to have really no point at all under this score, addict metaphor included. (So much for your "Each and every economist realises…": I happen to be an economist myself. Yet I would readily admit to a mistake, if you showed me any relevant data I have overlooked).
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3. "If Italians are aware of that [default risk], the only result should be austerity at home." Actually — although it's true that very many Italians don't yet realise the nature of their plight — austerity at home has been already started in earnest by Mr Monti. Italy's families are currently moaning under a 2% increase in overall taxation relative to GDP, putting Italy among the most heavily taxed countries in the world (in spite of all its tax evasion). Besides, unemployment has jumped up too and will still be increasing for the next couple of years. Thousands of firms have already gone belly up and GDP is falling again. All of that is, of course, strictly necessary — whatever Italy's Keynesians might be yelling right now. Yet, you should at least be aware that it's happening. Moreover, it's precisely what is currently making things electorally difficult for Mr Monti. A bit more friendly comment from the rest of Europe (particularly outside Germany) would not be entirely amiss, in everybody's interest.

According to the last news Obama is on the point to file charges also against MOODY'S too as I have above forekast. In some sense these rating Services sound fishy to Obama and to us too and their members cannot be much trustworthy. Monti who is, who was Moody's senior member and at the same time he was, he is Goldman Sachs's advisor (the merchant bank sister of the Lehman's) he is to be avoided like the plague. If this political joke gets elected to office (Italy's PM),then it's no joke.

I have a small question:why the bankers-gangstera of MPS were not eavesdropped as happens to Berlusconi and other hundreds of thousends of italians?WHY? The answer is simple:the PD and his magistrates were conspiring against the freedom of Italy to reach their goals,but something happened and the incoming elections split up the left and triggerd an underground war among communists.

In this article the topic is just Monte Paschi. Although this bank has long been outspoken as a politicized credit company, pursuing a political propaganda, as somebody clearly seems being up to do, is just off-topic. Whatever political interest may have been mingling with this matter, if ever, it shall be proved and debated at a court trial.
In the meantime it's not any worth speaking on this purpose; it's nothing worth and quite useless saying what nobody can really and actually know.
Least, it's indeed not any witty and not on topic trying to rehabilitate the adversary (say Berlusconi), pretending what he is accused for is political maneuver and any foolery he is always going to imbibe people with. It's, in all, no reason take the advantage to path any political propaganda. It's still off topic and meaningless at all.

"The troubles at MPS date back to when Mr Visco’s predecessor, Mario Draghi, now the president of the European Central Bank, was governor of the Bank of Italy. [...] Politics, poor management and lax supervision already make for a distasteful banking cocktail."
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Distasteful indeed.
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Within just six weeks' time, between October and November 2007, Banca Antonveneta passed hands from Dutch ABN AMRO to Spanish Santander to, finally, Italian Monte dei Paschi. Between the 1st transaction and the 2nd, the price jumped up from 6.4 to 9 billion euro.
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Banca d'Italia's then-governor, Mario Draghi signed the deal off nevertheless. Now it is rumored that there were 1-2 billion euro (!) in bribes being handed out to various officials at the involved banks and beyond.
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Either Draghi was involved in this - and that should be the end of his career. Or he was not, then that proves that his oversight was non-existant - which would disqualify him at the ECB's helm at a time when the bank is trying to establish pan-European oversight under its auspices.
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Banca d'Italia always had a less-than-stellar reputation because it was too close to comfort to the Italian government for investors (which is why the Italian Lira had no relevance whatsoever for foreign investment and effectively was a solely locally used currency - unlike, in Europe, the Deutschmark, the Swiss Franc and the British Pound); but at least its reputation for exercising proper oversight was not called into question - until now.

I apologise for my previous (and twice repeated) misspelling of ABN AMRO: thanks to Mr Solari/Djilas for pointing out that slip. As to my evidence for Mr D'Alema's role within MPS, the Banca del Salento feat and the current role of "the Apulians" within MPS's shareholding should be no secret to anybody.
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I turn now to some of the several morals that one can apparently draw from the fascinating Antonveneta story.
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The first one appears to be that the current focus on probable accounting and other crimes, however necessary, should not obscure the much wider and deeper socio-political crony-banking problem that this episode has crudely thrown up. At the same time, though, one must secondly admit that on this score Italy's (former?) Communists have not really invented anything: they are treading (albeit in a slightly less cautious way) on just the very same well-worn and ubiquitous paths first opened up within Italian society by the Catholic Church — with very similar implications for Italy's efficiency and democracy. One just wonders what Catholic Mr Monti might actually think of all that.
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A third possible conclusion, following from all this, is that at the very least the political appointment of bank managers might now be seen as not really such a good idea after all. By itself that should logically lead to Italy's Parliament abolishing the country's monstrous banking foundations straight away, but of course nothing of that sort is going to happen just yet. As an immediate alternative — and remembering that crony "mutual" banking is a big problem in Spain and Germany too — one might perhaps put one's hope on the currently hatching European Banking Union, and so push for strong ECB regulation to force a wedge between local banking and political influence peddling. How likely would such an attempt be to succeed? Perhaps not much I fear.
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Finally — as a last resort and considering the deep financial trouble the MPS foundation (as distinguished from the homonymous bank) is already stuck into right now — one might at least hope that in the longer run the healing (though painful) forces of free-market competition might eventually do the job by themselves, causing the foundations and all the other politically-tainted credit institutions to just go bust — as they do seem to richly deserve anyway on both economic and political grounds.

I rather tend to agree with you that, retrospectively, one main point raised by MPS bank's "mountain of risk" is the inefficiency of the sort of party-political banking encouraged (indeed almost mandated) by Italy's peculiar system of banking foundations. Yet — as you yourself seem to admit — abolishing the foundations straight away (apart from being politically unfeasible) would be now a rather messy process. There is however a much simpler solution, already suggested long ago by a former Bank of Italy director called Lamberto Dini. As early as November 1994 — as Treasury Minister in the first Berlusconi government — Mr Dini did in fact issue a directive whereby all the banking foundations should have diversified their portfolios away from banks. Together with his proposed reform of Italy's pension system, this met with very stiff opposition, contributing to the quick fall of the government of which he was a member and hence to the (left-imposed) shelving of the whole idea for good.
.
Yet times have changed. After having badly burnt their fingers, even the people from PD might now agree to forbid by law that the foundations keep any controlling stake (even a minority one) in any firm — let alone a bank.

I note that the journalist Luigi Zingales published an excellent article 14 months ago in IlSole24Ore, suggesting that the banking foundations could be nationalised and sold by the Treasury to help pay off our national debt. He called their influence the modern-day equivalent of the "mort-main" (the Church's "dead hand" on the economy) of 19th century fame.

The foundations that stand behind Unicredit retorted last year that their system provided for rapid and efficient re-capitalisation of the bank, while their "hand" was a conservative element in our financial system that had helped avoid Italian exposure to the recent financial scandals around North America and Europe. (Not that I necessarily support these arguments - I am in favour of anything to reduce our dear Republic's debt).

In any case, MPS BANK is a national heritage/treasure, and merits being saved. But the Foundation is proofing itself a cesspool of incompetence and the worst form of politicking, if not outright corruption. I think they will be rapidly selling off their shares of the bank and bowing out of the picture anyway.

Oh right. Dini was so hamstrung and blocked by the Left, prevented from effecting reforms, that he spent the next five years as the Centre-Left's Foreign Minister under the governments of Romano Prodi, Massimo D'Alema and Giuliano Amato. He then remained allied to the Left for the next 7 years after that, until joining Mr. Berlusconi in 2008.

And of course, everyone knows that the Left is a staunch defender of the banking Foundations in our country, because the Foundations are all made up of Italy's ruling Left-wing families (NOT!)

Italy's banking Foundations have long been bastions for the Right and the Christian Democrats - they represent the alliance of Great Families in each big northern Italian city that rule our financial/industrial model.
I think Siena basically demonstrates that the Left proved itself spectacularly incompetent when they tried to play that game. These days the Foundations are mostly hunting grounds for the Northern League.

You will forgive me if I don't really see the rational link between Mr Dini's later political wanderings and the basic good sense (and foresight) of his 1994 directive. That the latter was blocked by all subsequent governments (starting with the centre-left ones) is a simple fact you cannot deny, but at the same time it's perhaps not too relevant today, given current developments. Your obviously emotional sensitivity on this historical topic is, I feel, just rather funny.

Mr Zingales's proposal — if feasible, which I doubt — would be good for Italy's banks but very much less so for Italy's debt. That is so because its debt effect would only be an on-off affair, restricted to a single year and not affecting the ongoing structural causes of Italy's fiscal troubles. On that score, Mr Zingales seems to be sharing the very same short-sighted approach displayed as Minister by Mr Bersani, who pursued privatisations as a way to make quick money for the Treasury, rather than to promote competition. If you think of it, that sort of quick-buck chronic lack of foresight is not really very different from the basic attitude that troubled MPS's failed PD management.

You cannot really understand this story without some background information on the Antonveneta deal.

Italy's bank "Banca Antoniana Popolare Veneta" (briefly known as Antonveneta) was born in 1996 from the merger of two Padua credit unions originally founded shortly after Italy's unification, under the aegis of the local Catholic Bishop, as tools in a political fight — throughout the whole North-Eastern region of Veneto — against the new Italian secular state. Their technique was to use arbitrary retail credit rationing to maximise social influence (rather than to manage risk), under the economic cover of monopoly profits generated by local market power. After WW2 this made of them rather effective tools of the very firm Christian-Democrat political dominance in the region. So the 1996-born Antonveneta was itself a still larger cronyism-infested cooperative bank, with an almost 90% retail business and only operating locally, but with an entrenched network of some 1,000 branches. However, after the national collapse of Catholic political power due to the "clean hands" scandal, it had lost its overlord and was now up for grabs.

Thus in 2006 (after having been incorporated) it was in fact grabbed by the Dutch of ABN MANRO, as a foothold in their history-making break into the until then tightly closed Italian banking system. Yet, on purely financial grounds, it was not a very attractive asset. So in 2007, when ABN MANRO was itself taken over and Antonveneta was inherited by Santander, the latter was only too happy to unload it. And it probably could not believe its luck when MPS offered almost twice Antonveneta's value for the privilege of getting hold of it. So the real question is: why on earth did MPS do that?

Yes, now you have got it. In the eyes of the politically-appointed managers of MPS, Antonveneta's cosy network was no ordinary financial asset. In the words of Bocconi's Tito Boeri, it was for them an investment into maximizing not profit, but power. In a way, it was historically back to square one: only that the old place of Padua's bishop had now been taken over by a PD former Communist leader called D'Alema. Indeed, back in 2005 Mr D'Alema had already managed a similar though much smaller trick, by getting hold through MPS of another former Catholic credit union (Banca del Salento), this time right in his own Apulia constituency. And the idea was always just the same: to extend geographically the use of corrupt credit rationing as a comfy tool to maximise political power. Only that this time Mr D'Alema has bitten out more than he can financially chew, with the consequences that everybody can see.

A non-hostile question (thank you for this post - you make good points): How do you know it was D'Alema behind the MPS operation?

By the way, the name of the Dutch bank is ABN AMRO.

I detested D'Alema's influence on the party for years - and he is one of the major reasons (together with Veltroni) that I prefer to stay inside Vendola's SEL instead of the Democratic Party.
I was told by a Catholic friend that D'Alema has been carrying around a lapel pin of the Legionnaires of Christ, having made an alliance with that force some years ago - our Machiavellian "Atheist" leader.

D'Alema and others were also part of that wing of the party that told the base "enough with the special morality crusade" "we have to stop believing we are more puritan than the rest of Italy". During the debate over the three motions sponsored at the Party Congress within the old Left Democrats in 2007, the motion written by Piero Fassino cited Bettino Craxi as an historic leader of the Italian Left, but did not cite Enrico Berlinguer. In my Section, we called out the Fassinians on this point, and they went down as a minority.

Why to wonder?The crima ssociation and band of communists named PD already stole millions in scandals accutately censored by their pen sellers of the junk press.I mean the scandal of mister Bassolino living for 15 years his love affair with the Camorra,the scandal Tedesco in Bari,the Penati in Milan,the Cinqueterre,and the old billion TELEKOM SERBIA.Why this time this scandal came up in full view?Because the single parties of the left are struggling for power in view of the incomig elections.PRESI CON LE MANI NELLA MARMELLATA,two billions vanished for years while the Procure by them remote controlled were inquiring BErlusconi and Bunga bunga.While they were trying the cCaliere,they made BINGO innstead of bunga bunga.The free men and women of Italy will present the bill to the Band within 3 weekks:this is what the polls say.You can deceive someone forever,you can deceive everyone for once,you cannot deceive everyone forever

The article is incomplete. It fails to describe one of Spain major banks role in this whole mess. Current investigation points to a corruption/fraud fee of around 2 billion that was paid by Santander. Santander must come clean now; it must clearly indicate what the 2 billion where for , to whom money was paid, and for what reasons. It must also clearly indicate the role of British banks in recycling this money (Money laundering) . Not only are Italian citizen required to fund MPS mess worth 4 billion but Italy is also contributing to the EU Spanish bailout fund to help Spanish banks. Technically we are funding organized crime with the full OK of the European Union and bank. No wonder the Brits want to get of the EU. Enough is enough. This daylight robbery by banks must stop NOW

I am sorry. Although this may have little to do with this topic, such a matter lies within a larger deal of mismanagement, wrongdoings, political and business crime all together. In this political mayhem is also the attitude of any politician to keep and make the own power as steady as possible. They are the same politicians who never give up to their overwage and money wasting at most.
In the meantime, a lot of this bank's employees are really risking the own job unless - perhaps - they give up to a few days' office leave and a part of their wages. This last detail has nothing to do with managers', it shall thus not to be confused with.

After a series of previous officers' waste and wickedness, after consequent damage, everything shall be paid for by employees, as ever.
I hope that whoever is responsible and convicted upon this mismanagement shall be deservedly punished.

We will be ready to hail the former chairman in jail, we wish him and others, in the meantime, to enjoy their (long) good time.

Rot is EVERYWHERE in Italy's political economy. A country that could keep a "sawdust" Mussolini like Berlusconi as a leader for over a decade has REALLY DEEP cultural, moral and political maladies. The Italians have been come back artists for thousands of years but the current set of Socialist/Mercantilist and Crony Capitalist distortions is really a much deeper challenge to overcome than just changing some rules and raising the taxes that don't get paid. Thank goodness for the huge underground cash or barter economy that really keeps thing afloat. Legalizing and formalizing the individual enterprises that can't operate openly is the future.

You can point fingers at Berlusconi, fact remains that this mess was created by Democratic Party. Have you ever wondered why the PD never forced the law regarding 'conflitto d'interesse'
If Berluscono wins (major disaster for Italy and the EU) it will be thanks to these incompetent people in the Democratic party linke Bersani, ect...Bersani knew about MPS problems; before the elections one must always clean out skeletons in the cupboard

There is plenty of BLAME to go around and around in the Pasta Republic. Italy needs solutions: FAST! Dictators Never solve things. They just forcibly conceal disorders. Italy HAS a functioning economy. It has just been pushed underground and needs to be legalized.

While in Italy the mass media and the left Press are diverting people'attention with laughable issues and gossips like e.g.Berlusconi's comments on Mussolini's deeds, somthing banal and insignificant happened 80 years ago, they don't make much of the huge, appaling scandal concerning the PD the criminal left party which through the bank Monte dei Paschi of Siena has stolen and snatched 14 billion euros and is on the point of ruling Italy. An awful cheek this Bersani!

Did someone say "greed is good"?... Especially for banking Directors?
Since the last... And for the next...
541 years?...
Considering that Hitler sometime said: "Bankers are politicians whose ideology is money..." (allegedly)
We should consider this is the TRUE Empire of the 1000+ years! SERIOUSLY!

You say it because any reference to nazism in public fora is labelled as "politically incorrect"?...
Or because many of the sayings attributed to the Führer were mostly said under unclear circumstances (even including the theses that the historical figure in question was mentally deluded, clinically)?...
Or because the archives related to fascism and nazism have been overly manipulated during the last 50 years, under the formula that "history is written by the victorious"?...

Anyway (and I don't intend to argue for or against any events or ideologies in particular, at least over the topic of banking), it may be that I'm missing a part of the bigger picture... But I'm open to all perspectives on the subject...

In the end, this is what dialectic thinking is about:
THE$I$
+
ANTITHE$I$
=
$YNTHE$Y$

Haha! You're so right! It's true that dialectic thinking is a philosophical 'justification' for contradictions in argument, as you say.
But it's also true that it's a quite useful tool for fooling and screwing up with the passions of at least, 70% of people in the planet [for further reference, recall the concept of "doublethinking" in G. Orwell's novel, '1984': "war is peace, freedom is slavery, ignorance is strength"]

Dialectic is respectable in a number of contexts. The Talmud is based on dialectic. However, at SOME point there has to be a conclusion or consensus. The Talmud is a preface to the Talmud Torah and commentaries of Maimonides who fixed religious doctrine and practice for his and generally for subsequent time. Maybe seeing how intellectual sausage gets made gives you a better appreciation and understanding of the final product.

The PD's electoral tactics are pitiful. Although the PD because of Monte dei Paschi's affaire is in a tight corner and is indefendible, it tries to use the distraction offered by Berlusconi with his yersterday laughable comment about Mussolini and his time. Bersani and his criminal party seized the opportunity to divert media's attention from his party's misdeeds about its bank's fraud and trickery. His trick won't work with most of the people. Jews know too well that Berlusconi is Israel'friend while the leftists have always sympathized with Israel's enemies (Palestinians, Iran and Hamas).

You are right just saying PD is not out of crooks or any people likely to defend someone else's power and privilege, even sharing with them any illicit advantage. That is very likely although everything shall be appropriately proved in a court trial. On anything else about Berlusconi, no, no way and no pretext, no mean excuse to dribble his responsibility on any purpose nor defuse anything of that and confuse anybody's mind.
Mr S.B. has always been a famous manager and a crime genius in business, mingling and managing politics for his own aim, his business was mainly misinformation. He has now been up to go over himself and beat his own record even on that; from misinformation to so-called revisionism, making history his own way. Putting fascism back into better light too is profitable for him in any way.

Berlusconi, the ever aiming power climbing fellow,
the most dangerous ever

hey longman333; how are you ? Actually this time I must agree with you wrt to PD. Berlusconi comments on Mussolini is one of mentally sick man; someone must tell him that prostitutes bring diseases. All I can say that in Italy we have a major disaster. There is just no hope. Two of Italy biggest parties are responsible for the mess we have in Italy. What I suggest that you do is that in 1 years time lets looks the situation again. I am pessimistic because the election will bring total political confusion, Italy does not have the luxury to wait around for the politicians to sort out their mess.

While in Italy the mass media and the left Press are diverting people'attention with laughable issues and gossips like e.g.Berlusconi's comments on Mussolini's deeds, something banal and insignificant that happened 80 years ago and nobody cares, they don't make much of the huge, appaling scandal concerning the PD the criminal left party heir of Communism, which through the bank Monte dei Paschi of Siena has stolen and snatched 14 billion euros and is on the point of ruling Italy. A terrifying event for Italy and Europe.

It is amazing how the media in Italy are downplaying the Monte dei Paschi scandal and avoiding every contact with the PD (the Democratc Party heir of the Italian Communist Party), and former communist Bersani the true responsable of the criminal management of this bank since he has put his men in key position into this bank from the presidence to che board of directors. This party is acting like a true mafia, like mob, like a true criminal organization. Italians are unaware of the danger they are running if this party with such criminal traits, should manage the country. The style would be more or less the same they used in managing the bank. The leopard doesn't change his spots.

It is amazing how the media in Italy are downplaying the Monte dei Paschi scandal and avoiding every contact with the PD (the Democratc Party heir of the Italian Communist Party), and former communist Bersani the true responsable of the criminal management of this bank since he has put his men in key position into this bank from the presidence to che board of directors. This party is acting like a true mafia, like mob, like a true criminal organization. Italians are unaware of the danger they are running if this party with such criminal traits, should manage the country. The style would be more or less the same they used in managing the bank. The leopard doesn't change his spots.

"Hopefully, all this won’t spell the end of the independence of world’s oldest bank.". But MPS is not independent: like all other nominally privatized Italian banks it's controlled by politicians and their appointees, and that's precisely the root of its problems.

The communist Bersani said yesterday that he would tear everybody to pieces who dares to say that his party (the PD)is implicated ih the bank‘s scandal. He is frightened to death that this story, this scandal where his party is involved in...up to its neck, could cost him the victory he has so long craved for....

.....being attacked by Bersani (He said that he would tear everybody to pieces who dares to say that his party - the PD - is implicated ih the bank‘s scandal) would be like being savaged by a dead sheep.